Home-shopping channel addiction: A fast path to credit card debt

Charging from the sofa is comfortable, convenient -- but can get out of hand

If home shopping is causing you to bust
your budget or descend into debt, it's time to switch channels -- perhaps
permanently.

Why home shopping is successful
Many local cable companies host televised
retailers, but the frontrunners are QVC (Quality, Value, Convenience) and HSN
(Home Shopping Network). Big or small, though, the formats are the same: Hosts present products from specific
companies, such as Philosophy skin-care items and Dell computers, or focus on a category of
items, such as handbags and cookware, from various lines. Company representatives --
who are sometimes top-tier celebrities and designers -- are present to answer
questions. A few lucky customers even make it on air to chat with them. This
brush with fame spurs excitement.

Into
debt, too. Clifford says she took out a $15,000 loan from her credit union to
pay off her credit card balances, the bulk of which was from home shopping.
What did she buy? Cubic zirconia, silver chains, a vacuum cleaner, microwave Tupperware
and much more.

The casual, relatable sales techniques
makes home shopping compelling. "It's an over-the-fence, backyard
conversation," says Nick Romer, author of "Make Millions by Selling on QVC." Romer, who has represented his own line of arts and
crafts tools on QVC and is now with HSN, has sold over $14 million worth of
products.

"You're selling benefits, not
features," says Romer. "If I tell you this lipstick will stay on your lips even
after a dip in the Caribbean, well, that's a picture I'm painting for you." This
strategy works, as it creates an intimate and applicable experience.

It's hard to beat a great pitch, too,
as Cynthia Ballard Borris, a writer from San Lorenzo, Calif., discovered. "I
think after watching over and over again how wonderful these binoculars with a
zoom and a camera were, and that there were only five left, really got to me!," recalls
Borris, who says she was influenced by the marketing and regretted the $100
purchase.

So what's the problem?
There's nothing wrong with stocking up
on necessities, but if you're trying to stick to a spending plan, the soft sell
mixed with entertainment, 24-hour a day access and purchasing simplicity can
lead to buyer's remorse. The payment methods can also be seductive and
expensive:

Installments. Both HSN and QVC offer the ability to spread the cost of
an item out over a few months if you pay with your credit card. However, the
psychological impact of doing so creates the illusion that you're not really
spending as much as you are. Hosts often stress the monthly payment versus the
actual cost.

Costly credit cards. Home shopping company credit cards tend to have higher
interest rates than general purpose cards. The QVC's Q card, issued by GE Money
Bank, for example, sports a 24.99 percent APR and HSN's card, issued by World
Financial Capital Bank, is 26.99 percent. The average rate for a new general purpose card is about 15 percent.

Auto-delivery. For such things as skin-care products and foodstuffs, you
may be able to save on shipping or "lock in" low pricing by enrolling in a
program where they send additional items automatically. This is great if you
need a monthly cheesecake, but it's not so good if you really can't afford to
shell out that extra money on a regular basis.

Remote control
purchasing. A recent development is the ability to
buy directly from your TV remote control. To make a purchase, all you have to
do is press the "OK" button. Impulse shopping has never been easier.

Customers most susceptible to home shopping debt
The segment of people
who get into the most financial trouble with home shopping are collectors, says Steve
Rhode, founder of GetoutOfDebt.org, based in Raleigh, N.C. There are many lines
of collectibles featured on both HSN and QVC -- from coins to artwork. In fact,
a community board set up by QVC reveals the problems associated with collecting
such items. A poster identifying herself as "TomGirl" initiated a recent
thread:

You have to know when to walk away. Go make
yourself a cup of tea, and when you come back, you can think about it more
clearly.

-- Cynthia Ballard Borris
Writer, San Lorenzo, Calif.

"I
was thinking about phases I've gone thru with QVC where I had to have EVERY one
of a particular item...I went thru a "cotton throw" stage -- I have a
MILLION of them in original packages that I will NEVER use if I have a thousand
beds!!! And down blankets. I am single and have a DOZEN queen/king sizes. If it
had 1/2 oz more down, I HAD to have it!!! I put the brakes on it when I started
with the Temptations [ceramic cookware]. I could host a dinner party for 50 people and give them each
2 pieces!!!!!!!!! OK.... I told -- who else is brave enuf to play?!?!?!?!!!!!!"

Dozens of commiserating customers
responded to her challenge. Rhode isn't surprised. "It's very hard for
collectors to stop buying," he says. "It's the thrill of the hunt."

Furthermore, the hosts can seem like
friends, especially for those who are loners or are homebound, as their very
warmth provides a sense of trust and camaraderie. "Shoppers get an emotional
benefit," says Rhode. "QVC and HSN do a lot of things that foster that
feeling. They even have an online community where you can talk to the hosts."

Clifford agrees. "There's something
about watching it on TV ... it's the personalities of the people they hire. They
made me feel like I wasn't alone. It's having someone to talk to and they make
you feel special. When you're going through a depression, it's dangerous. It's
like TV Prozac!"

Can't stop shopping? Yes, touch that
dial
To keep home shopping (and your net
worth) positive, Rhode recommends setting a maximum amount you want to spend
each month. "You don't need to cut out all home shopping. Set an internal
restriction. Give yourself permission to buy one thing per week. This way,
you're creating a boundary, and you're intensifying the positive feeling of
doing it in the first place."

Use the least expensive payment method. Don't think you have
to apply for the company's card.

Repay what you do charge in full before the due date.

Be wary of the installment option. Sit down and total the
real cost before purchasing.

Avoid auto-delivery. Chances are high that you won't terminate
it before overbuying.

Stop and think before purchasing -- no matter how few are
left

Clifford says that checking out the
item on your computer can also prevent impulse purchases. "It often doesn't
look that amazing online."

And pay attention to when you shop,
says Borris. The time of day she was watching had a lot to do with her pricey
binoculars. "If I'm up in the middle of the night, I tend to buy more. I avoid
those times now." Her advice: "You have to know when to walk away. Go make
yourself a cup of tea, and when you come back, you can think about it more
clearly."

Finally, if the lure of home shopping
is too strong and limiting yourself isn't working, Rhode says to pull the plug.
"Call your cable company and get rid of the channels."

Published: November 29, 2010

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